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Regular Session, 2011
HOUSE BILL NO. 261
BY REPRESENTATIVE CARMODY
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
MOTOR VEHICLES: Provides relative to the La. Motor Vehicle Commission
AN ACT1
To amend and reenact R.S. 32:1254(A)(19) and (E)(9)(d), 1261(6)(a), and 1262(B)(1) and2
(4) and to enact R.S. 32:1262(B)(5) through (7), relative to the sale and distribution3
of motor vehicles; to exclude nonresident exhibitors from licensure by the Motor4
Vehicle Commission; to exempt recreational products dealers from certain licensure,5
franchise modification, and warranty requirements under certain circumstances; to6
provide for certain prohibited acts involving franchise agreements; to provide7
guidelines for audits of dealer records; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 32:1254(A)(19) and (E)(9)(d), 1261(6)(a), and 1262(B)(1) and (4)10
are hereby amended and reenacted and R.S. 32:1262(B)(5) through (7) are hereby enacted11
to read as follows:12
§1254. Application for license; requirements for licensure; contents; licenses;13
franchise filings14
A. The following persons shall be licensed by the commission in order to15
engage in business in the state of Louisiana, regardless of whether or not said person16
maintains or has a place or places of business in this state, and it is a violation of this17
Chapter to operate without first obtaining a license:18
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(19) Auto shows, trade shows, and exhibitions, including promoters and1
nonresident exhibitors.2
* * *3
E. Additional licensing and compliance requirements for motor vehicle and4
recreational products dealers.5
* * *6
(9)7
* * *8
(d) Notwithstanding any other provisions of law to the contrary, any motor9
vehicle or recreational products dealer holding a license hereunder shall not be10
required to obtain a license as a motor vehicle lessor, used motor vehicle dealer, or11
specialty vehicle dealer or converter, when modifying or selling those vehicles or12
products he is duly franchised and licensed to sell, provided such operations are13
conducted from the location from which such motor vehicle or recreational products14
dealer is licensed to do business.15
* * *16
§1261. Unauthorized acts17
It shall be a violation of this Chapter:18
* * *19
(6) For any person or other licensee:20
(a)(i) To modify a franchise during the term of the agreement or upon its21
renewal if the modification substantially and adversely affects the franchisee's rights,22
obligations, investment, or return on investment without giving sixty-day written23
notice of the proposed modification to the licensee and the commission which24
includes the grounds upon which the modification is based, unless the modifications25
are modification is required by law, court order, or the commission. Within the26
sixty-day notice period the licensee may file with the commission a complaint for a27
determination whether there is good cause for permitting the proposed modification.28
The party seeking to modify or replace an agreement must shall demonstrate by a29 HLS 11RS-439 REENGROSSED
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preponderance of the evidence that there is good cause for the modification or1
replacement. The commission shall schedule a hearing within sixty days to decide2
the matter. Multiple complaints pertaining to the same proposed modifications shall3
be consolidated for hearing. The proposed modification may not take effect pending4
the determination of the matter.5
(ii) With respect to recreational products, to modify a franchise during the6
term of the agreement or upon its renewal if the modification substantially and7
adversely affects the franchisee's rights, obligations, investment, or return on8
investment without giving sixty-day written notice of the proposed modification to9
the licensee and the commission unless the modifications are required by law, court10
order, or the commission. Within the sixty-day notice period the licensee may file11
with the commission a complaint for a determination whether there is good cause for12
permitting the proposed modification. The party seeking to modify or replace an13
agreement shall demonstrate by a preponderance of the evidence that there is good14
cause for the modification or replacement. The commission shall schedule a hearing15
within sixty days to decide the matter. Multiple complaints pertaining to the same16
proposed modifications shall be consolidated for hearing. The proposed17
modification may not take effect pending the determination of the matter.18
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§1262. Warranty; compensation; audits of dealer records20
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B.(1) Notwithstanding the terms of any franchise agreement, warranty, and22
sales incentive, audits of dealer records may be conducted by the manufacturer,23
distributor, distributor branch, or factory branch. Any audit for warranty parts or24
service compensation shall be for the twelve-month period immediately following25
the date of the payment of the claim by the manufacturer or distributor. However,26
a dealer shall not be held liable by virtue of an audit for failure to retain parts for a27
period in excess of six months. Any audit for sales incentives, service incentives,28
rebates, or other forms of incentive compensation shall only be for the twelve-month29 HLS 11RS-439 REENGROSSED
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period immediately following the date of the close of the promotion, event, program,1
or activity. the final payment to the dealer under a promotion, event, program, or2
activity. In no event shall the manufacturer, distributor, distributor branch, or factory3
branch fail to allow the dealer to make corrections to the sales data in less than one4
hundred twenty days from the program period. Additionally, no penalty other than5
amounts advanced on a vehicle reported incorrectly shall be due in connection with6
the audit. With respect to vehicles sold during the time period subject to the audit,7
but submitted incorrectly to the manufacturer, distributor, or wholesale distributor8
branch or factory branch, the dealer shall be charged back for the amount reported9
incorrectly and credited with the amount due, if anything, on the actual sale date.10
* * *11
(4)(a) A dealer shall not be charged back on a claim when a dealer performs12
a repair covered by the manufacturer's or distributor's warranty, and the dealer13
reasonably demonstrates that the repair resolved the condition which the customer14
presented for resolution, and the dealer documents what has been repaired and the15
process utilized to accomplish the repair.16
(b) The provisions of Subparagraph (a) of this Paragraph shall not apply to17
recreational products dealers.18
(5) Limitations on warranty parts or service compensation, sales incentive19
audits, rebates, or other forms of incentive compensation, chargebacks for warranty20
parts or service compensation, and service incentives and chargebacks for sales21
compensation only shall not be effective in the case of intentionally false or22
fraudulent claims.23
(6) It shall be deemed an unfair act pursuant to this Chapter to audit a dealer24
more frequently than two sales-related and two service-related audits in a twelve-25
month period. Nothing in this Subsection shall limit a manufacturer's or distributor's26
ability to perform routine claim reviews in the normal course of business.27
(7) No claim may be rejected as late if it has been submitted within sixty28
days of the date the repair order was written.29 HLS 11RS-439 REENGROSSED
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Carmody HB No. 261
Abstract: Provides relative to the sale and distribution of motor vehicles.
Present law requires that certain persons be licensed by the Motor Vehicle Commission,
including auto shows, trade shows, and exhibitions, which also includes promoters and
nonresident exhibitors.
Proposed law repeals the requirement that nonresident exhibitors be licensed by the
commission.
Present law provides for additional licensing and compliance requirements for motor vehicle
and recreational products dealers.
Present law provides that a motor vehicle dealer holding a license shall not be required to
obtain a license as a motor vehicle lessor, used motor vehicle dealer, or specialty vehicle
dealer or converter, when modifying or selling those vehicles he is duly franchised and
licensed to sell when such operations are conducted from the location from which the motor
vehicle dealer is licensed to do business.
Proposed law retains present law but also exempts recreational products dealers from the
requirement to obtain a license for the purposes of modifying or selling vehicles they are
duly franchised and licensed to sell from the location from which the recreational products
dealer is licensed to do business.
Present law provides for unauthorized acts pursuant to present law regarding the sale and
distribution of motor vehicles.
Present law provides that it is an unauthorized act for any person or other licensee to modify
a franchise during the term of the agreement or upon its renewal if the modification
substantially and adversely affects the franchisee's rights, obligations, investment, or return
on investment without giving 60-days written notice of the proposed modification to the
licensee and Motor Vehicle Commission. Such notice is not required if the modification is
required by law, court order, or the commission.
Proposed law requires that the 60-day written notice to the licensee and commission must
include the grounds upon which the modification is based. Proposed law exempts
recreational products from proposed law franchise modification requirements.
Present law provides that warranty and sales incentive audits of dealer records may be
conducted by the manufacturer, distributor, distributor branch, or factory branch.
Present law further provides that any audit for sales incentives, service incentives, rebates,
or other forms of incentive compensation shall only be for the 12-month period immediately
following the date of the close of the promotion, event, program, or activity.
Proposed law changes present law by providing that the 12-month period shall begin
following the date of final payment to the dealer under a promotion, event, program, or
activity. HLS 11RS-439 REENGROSSED
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Proposed law provides that a dealer shall not be charged back on a claim when a dealer
performs a repair covered by the manufacturer's or distributor's warranty, and the dealer
reasonably demonstrates that the repair resolved the condition which the customer presented
for resolution, and the dealer documents what has been repaired and the process utilized to
accomplish the repair. Proposed law exempts recreational products dealers.
Proposed law provides that it shall be deemed an unfair act pursuant to present law to audit
a dealer more frequently than two sales-related and two service-related audits in a 12-month
period. Proposed law provides that nothing in proposed law shall limit a manufacturer's or
distributor's ability to perform routine claim reviews in the normal course of business.
Proposed law provides no claim may be rejected as late if it has been submitted within 60
days of the date the repair order was written.
(Amends R.S. 32:1254(A)(19) and E(9)(d), 1261(6)(a), and 1262(B)(1) and (4); Adds R.S.
32:1262(B)(5)-(7))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Commerce to the original
bill.
1. Exempted nonresident exhibitor from licensure requirements by the Motor
Vehicle Commission.
2.Exempted recreational products dealers from certain licensure requirements
under certain circumstances.
3.Clarified that the 60-day notice to modify a franchise must include the grounds
upon which the modification is based.
4. Provided that any audit for sales incentives, service incentives, and rebates shall
only be for the 12-month period immediately following the date of final payment
to the dealer under a promotion, event, program, or activity.
5. Provided that a dealer shall not be charged back on a claim when a dealer
performs a repair covered by the manufacturer's or distributor's warranty and the
dealer reasonably demonstrates that the repair resolved the condition which the
customer presented for resolution and the dealer documents what has been
repaired and the process utilized to accomplish the repair.
6. Provided for the frequency of audits.
7. Changed from 90 days to 60 days the time period within which a claim may be
submitted before being rejected as late.
8. Made technical changes.
House Floor Amendments to the engrossed bill.
1. Made technical changes.
2. Exempted recreational products from proposed law requirements to modify
franchise agreements.
3. Exempted recreational products dealers from proposed law provisions regarding
the charging back of a claim.